Up until six months ago, Parag Parikh Flexi cap was an investor favourite. Its chart-topping performance and overseas investments served as the key attractions. These very same factors now appear to be doing the opposite, causing investors to worry over continuing investments. So, should you be concerned over Parag Parikh Flexi Cap’s performance? Is the restriction in investing abroad a game-changer for the fund?
As India’s economic activity picks up pace after being in deep freeze during Covid, investors have been hunting for sectors that can ride this recovery.
Manufacturing is back in favour in the stock market, largely driven by cyclicals such as auto, auto components, industrials and capital goods. In this report, we discuss in detail the prospects for the manufacturing space and how to play it through a thematic fund that we added a month ago in Prime Funds.
In this analysis, we look at indices on the ‘Quality’ factor. There are two NFOs running now – DSP Midcap 150 Quality 50 Index fund (there’s already the ETF version of this) and Aditya Birla SL Nifty 200 Quality 30. These two indices join the Nifty 100 Quality 30 index, on which there is an already existing ETF (from Edelweiss).
We have only a few changes this quarter with some interesting additions in the equity aggressive category and in debt as well. We have also added a couple of themed funds to capture a visible up trend in the economic activity.
This week, we’re issuing an invest recommendation on another theme that’s starting to break out of a long slump. This theme makes for a good portfolio differentiator as most other diversified equity funds, as yet, have not moved overweight by much on it.
We had taken a positive view on commodities early on, and added the theme through our ‘Economic Revival’ category under Thematic Investing since our inception in January 2020. But we added a commodity fund as part of the Strategic/thematic section in Prime Funds later in March 2021. The call was a bit late but yielded good results. Now we would like to alert you to book profits on this equity fund (NOT sell) and prune it back to your original capital.
The headlines now are devoted to sliding equity markets and stock opportunities to ‘buy the dip’. But that’s not the only window of opportunity to make the most of a correction. With the hike in repo rates earlier this month and a clear path now for higher rates, debt markets too offer scope for timely investments.
Not so long ago, if debt investors in India wanted to get a 7% plus return, they had to go to post office schemes with (poor service and) a long lock-in period like the PPF or GOI Floating Rate Savings Bonds with a 7-year lock-in period. These options, apart from the difficulty of accessing them, required investors to sacrifice liquidity for returns.
Some funds have a clear fundamental strategy that shows in their portfolio construct. When that strategy pays off, they deliver. But many good-to-hear strategies have failed for many mutual funds in recent years. This is partly due to fast-shuffling sector preferences in the market and partly due to high stock weights in the index that funds struggle to replicate. As a result, you see them underperforming key indices.
Prime Portfolios are a set of 19 unique portfolios that meet over 30 different investor timeframes and needs. Prime Portfolios are listed under Ready-to-use-portfolios in the Recommendations menu dropdown. These portfolios primarily use mutual funds, but where there are better-suited products such as deposits or government schemes, the portfolios include those too.
If there’s one trend that equity funds don’t seem to be shaking off soon, it is the performance divergence. Over the past few review cycles, we have been highlighting how up-and-coming funds have soared well past the earlier steady performers. Taking stock of the underperformers, the nature of market movements, and returns we have made some key changes to our equity funds in this review cycle.